A former owner of a defunct Santa Monica aerobics club has agreed to reimburse more than 200 members who were left holding unexpired membership contracts when it went out of business nearly a year ago.
In an out-of-court settlement with the City of Santa Monica, Shirle Luttio, owner of Audra's Fitness Center, has agreed to refund $10,500 to the former members and pay $2,228.83 to the city to administer the fund.
The agreement also requires Luttio's company, Shirle Consultants Inc., to pay $10,000 to the city and Los Angeles County in civil penalties, as well as $1,788.30 to Santa Monica in taxes and fees.
The settlement means that the 225 members who filed claims with the city will receive up to $47 each. A woman with less than 50% of her membership remaining will be reimbursed half of the membership fee.
According to Santa Monica's consumer affairs attorney, cities rarely act on behalf of consumers when health clubs fail. Deputy City Atty. Jeffrey W. Holtzman said it is difficult to trace the trail left by companies and find out who is responsible for the refunds. "The clubs go out of business and then (the owners) say, 'They aren't our contracts,' " Holtzman said. "Consumers can't track down the old owners. It's not worth the fees at issue."
Out of Business
The aerobics club for women opened at 1441 4th St. in April, 1983, under the name of Shirle's Fitness Center, which was later changed to Audra's Fitness Center. In July, 1984, Luttio sold the club to Michael Taylor, who opened Today's Woman Aerobic and Fitness Center at the site. It went out of business a month later.
In January, Santa Monica filed a lawsuit against Luttio, Taylor and their health clubs and corporations, charging them with violating the state business and professions code.
Holtzman said the city has unsuccessfully tried to find Taylor to serve papers on him.
Luttio's attorney, Dennis Dwyer, said that Luttio should not be held responsible for the contracts because she transferred the memberships to Today's Woman when she sold the club to Taylor.
But Holtzman said that Luttio's company should bear much of the responsibility because it sold the original contracts to the club members.
As many as 225 people had filed formal complaints with the city, claiming that the contracts they had signed with Luttio were not being honored, Holtzman said. A handful picketed the club and more than 100 members signed a petition complaining about the situation.
Bernice Wallin said she renewed her membership two weeks before Audra's closed.
"People were very unhappy," Wallin said. "I was the one who started to picket. . . . A new owner bought it. He would not honor old memberships and the previous owner would not give us our money. Then (the new owner) dropped out of it. . . . I could never locate her (Luttio). I tried to track her down."
Holtzman said Luttio's firm sold two-year memberships for between $39 and $69 "up to the time that she sold and closed the business (in July, 1984). These contracts weren't honored by the subsequent owner (Taylor). When the subsequent owner went out of business, there were no refunds."
Luttio could not be reached for comment. Managers at Audra's Fitness Centers in El Monte and Glendale said that they do not know who owns the clubs. They said they do not know the telephone number of the corporation that calls them every night to tally the day's business. "All I know is they call at night. That's all the contact we have," said the manager of the Glendale center.
Santa Monica City Atty. Robert M. Myers said that the city has given high priority to such consumer cases in a program that includes a specialist and an attorney devoted to consumer affairs.
State and county officials said they have received numerous consumer complaints about health clubs. Shirley Goldinger, director of the county Department of Consumer Affairs, said that 105 written complaints about various health club practices have been received in the past year as well as "loads of health club complaints" over the phone.
She cited complaints about clubs that collect money from people and then never open or those that go out of business quickly, stranding people with long-term contracts. Clubs will close and transfer memberships to a distant facility or a club that charges higher fees, she said. And some clubs have misrepresented their membership packages.
Herschel Elkins, director of the consumer law section of the state attorney general's office, said that state regulation is needed.
"The present law is inadequate to deal with the problem," Elkins said. "(People) can start health clubs with no experience and no money and unfortunately try to capitalize their own business by getting money from people for two to three years, and then go under."
Two bills are pending in the state Legislature to regulate health clubs. Senate Bill 56, sponsored by Senator Joseph B. Montoya (D-Whittier), would require clubs to place membership receipts in a trust account until the club opens. The bill would also require clubs to contribute $300 a year to reimburse members of clubs that go under.
Assembly Bill 1616, sponsored by Assemblywoman Cathie Wright (R-Simi Valley) would require the clubs to disclose what the consumer will be getting and restrict the length and amount of membership contracts.
Goldinger warned consumers to be cautious. She said people should not sign anything under pressure, should join on a month-to-month basis and should make sure the club is already open before joining. She said that potential members should inspect the club before signing up.
Goldinger said that in cases such as Santa Monica's, in which the club goes out of business, the law indicates that a club is liable for refunding memberships. But she said in most cases that does not happen.
"It's a matter of finding (the owner) and making them cough up the money," Goldinger said. "First of all, it's hard to find them. If you find them, they are usually going through bankruptcy."